South Africa’s GDP growth rate is forecast to increase this year and improve moderately over the medium term, the National Treasury said today in its Budget 2017 documents.
Economic growth of 1.3 percent is projected for 2017, reaching 2.2 per cent by 2019.
Factors supporting the forecast include marginally higher global growth, stabilising commodity prices, greater reliability of the electricity network, more favourable weather conditions, recovering business and consumer confidence, and improved labour relations.
The positive trajectory marks a break with several years of declining growth. Yet the projected rate of growth is not high enough to markedly reduce unemployment, poverty and inequality. Inclusive growth – the National Treasury added – requires broad-based transformation to break down structural impediments to new economic activities, enable millions of black South Africans to generate income and accumulate capital, and raise per capita incomes across the board.
“In the short term, South Africa needs to bolster business and consumer confidence to support higher levels of investment. By improving policy certainty, safeguarding investment-grade credit ratings, and ensuring that the state meets its regulatory and service-delivery obligations, government can boost growth.
Medium- and long-term reforms are outlined in the National Development Plan (NDP).
“Broad-based transformation requires improved education and skills development, deconcentration of monopolised industries, private-sector participation in sectors dominated by public enterprises to promote competition and reduce costs, city reform to expand urban infrastructure development, and regional integration.”
The National Treasury noted that the government would continue to work with business and labour to rebuild confidence and improve prospects for more inclusive growth.
“The work of the Presidential Business Working Group and the CEO Initiative have led to improvements in the business registration process and the regulatory environment, and increased funding for small businesses and internships.”